Nonprofit
Imperative
…your nonprofit browser
October 2016
The
monthly newsletter dedicated to:
- exposing the crisis in nonprofit
fraud leadership…a crisis of pervasive and monumental waste, fraud, abuse,
mismanagement, and malfeasance throughout the charitable sector which
costs taxpayers and contributors tens of billions of dollars annually;
and,
- seeking reforms that will restore
the public’s lost confidence in the sector.
What’s Included:
Skunk of the Month:
Charity Regulations Not
Working; Vet Charity Fraud; Sandy Hook Charity Fraud…more
Breaking
the Silence:
Trump Foundation Under
Scrutiny
Charity Check Up:
Children’s
Services
A Thought or Two:
Principle For
Charities To Live By
Nonprofit News-In Case You Missed It:
Univ. of Louisville; Armed
Services Foundation …more
Political/Official Chicanery:
VA; MN; KS; ME; NC; NB; WA; IL; OK; CA;
UT; NY; MI …more
What Do You
Think?
·
To do good, donors must do their homework
· Give without being taken
…only 20 percent of respondents believe their
foundation accurately understands what it has accomplished for beneficiaries,
and not quite half believe their grant maker knows how its work has affected
grantee organizations. (effectivephilanthropy.org)
-------------------------------------
--------------------------------
"Don't give to the American Red
Cross"…. These feelings have been bolstered
by a widely circulated investigation by NPR and ProPublica, which found that the Red Cross grossly
mismanaged its response to Haiti's 2010 earthquake, one of the worst natural
disasters in the history of the Western Hemisphere. (washington
post)
-------------------------------
Nonprofit fraud experts
caution that charity scams are commonplace after every natural disaster. Be
careful!!! (barrons)
Skunk of the Month…
“They came to do good and they did very well
indeed (for themselves).”
Skunk of the Month is the twice-monthly designation made by Nonprofit Imperative, the organization
dedicated to eliminating waste, fraud, abuse and mismanagement in nonprofits
and government. The Skunk of the Month award is given to charities and government
officials who show blatant disregard for the interests and trust of
contributors and taxpayers. This month’s example is:ƒŽ‡ƒ•ˆ‹•
Studies of Charities
Regulation and Oversight of Nonprofits Is Not Working, Is Duplicative and
Fragmented
·
No
single state law of charities oversight exists; instead, oversight involves a
complex mix of substantive areas, including charitable trust law, governance,
criminal law, solicitation and registration requirements and compliance,
corporate transaction review, and conservation easements.
·
Organization
and staffing of state charity offices vary greatly across the country; in 41
percent of states one office has primary responsibility, but in 59 percent of
states responsibility is shared with other agencies or offices.
·
Within
an attorney general’s office, 13 jurisdictions have a charities bureau, and 14
jurisdictions house charities oversight within the consumer protection division
of the office.
·
Most
registration oversight is lodged in state attorneys’ general offices (21
states), followed by secretary of state offices (15) and other state - level charity
offices, typically, consumer affairs or business/financial regulation (8).
·
Lawyers
and non -legal staff who oversee charities number approximately 355 in the 48
reporting jurisdictions.
·
Thirty
- one percent of jurisdictions have less than one full- time – equivalent
staff, 51 percent have between 1 and 9.9 full – time - equivalent staff, and 19
percent have 10 or more full – time - equivalent staff.
·
Training
state charities staff is a mix of internal and external provision with the
smallest offices less likely to provide any training and the largest offices
providing in - house training
This
has resulted in fragmented oversight of nonprofits in the United States.
Another study has raised concerns and has
recommended that improvements need to take place because the best practices
(one-size-fits all) approach simply does not work.
Two Vet Charities Are A Small Snippet Of A Huge Problem
Leaders from two veterans groups facing embezzlement
charges (source)
Sandy Hook Charity
Conviction
…“to help
raise funds for increased school safety, families of victims, memorials to
teacher heroes, awareness, and prevention in schools across America” was the mission of the Sandy Hook charity, 26.4.26
Foundation. Instead of using all of the donated funds to support its purported
mission, the agency founder used $28,657 of donated funds to enrich himself and
to support his personal training business, the court documents state. Federal
officials arrested the founder in Tennessee on six counts of wire fraud on
February 13, 2015. Bruce pleaded guilty to one count of wire fraud on May 12,
2016.
Breaking the Silence:
Trump Foundation Under Scrutiny
The Donald J. Trump Foundation spent $258,000
to resolve legal disputes involving its namesake founder’s for-profit
companies, writes Washington Post.
The New York Times reports that the organization
— which solicited donations nationwide to support veterans in connection with a
January rally hosted by the Republican presidential candidate — is not
registered to raise money in 38 states that require charities to do so. Some
$1.67 million of the $5.6 million raised via the event in Iowa consisted of
online donations routed through Mr. Trump’s foundation, which has come under
media scrutiny for its unusual operation.
Donald Trump bought a painting of himself at a
charity auction in 2014, making the purchase using a check drawn on the Trump
Foundation. Media inquiries about just how the foundation used the painting
went unanswered. A Univision news anchor found the painting last week: It was hanging on the wall of
the Champions Bar and Grill at the Trump National Doral golf resort in Florida.
In short, “a portrait paid for by a charity was decorating the wall of Trump’s
for-profit business.” Trump campaign adviser said its being stored. The IRS
regulations governing private foundations (like the Donald J. Trump Foundation)
are more strict than those applied to public charities because the more
self-contained nature of private foundations is believed to make them more
vulnerable to bad acts by insiders. (washingtonpost)
The foundation — sustained for years by donors
outside the Trump family — never obtained the registration that New York
requires to solicit money from the public, state officials said. Charities as
large as Trump’s must also submit to an annual audit that asks, among other
things, whether the charity spent funds for the personal benefit of its
officers. Read more
Charity Check Up:
PA. Mental Health Services Hit With $600,000 Theft Over 12 Years
A woman was arrested after she allegedly stole from a
Philadelphia nonprofit that serves children. She is charged with theft and
embezzlement.
She was the director of Health and Management at Northern Children’s Services (NCS), a nonprofit organization that provides mental and behavioral health treatment services for children. As director, she verified the accuracy of consultants’ invoices and submitted them for payment. The executive is accused of preparing consulting invoices for relatives and friends who were never consultants for NCS. She also allegedly prepared invoices for people who were consultants for NCS but for work they never performed. She then allegedly forged the names of the recipients to cash the checks.
She was the director of Health and Management at Northern Children’s Services (NCS), a nonprofit organization that provides mental and behavioral health treatment services for children. As director, she verified the accuracy of consultants’ invoices and submitted them for payment. The executive is accused of preparing consulting invoices for relatives and friends who were never consultants for NCS. She also allegedly prepared invoices for people who were consultants for NCS but for work they never performed. She then allegedly forged the names of the recipients to cash the checks.
Officials say she stole approximately $607,067 from NCS
between December of 2002 and April of 2014.
A
Thought or Two:
RAY
DALIO at Bridgewater Associates shares some thoughtful fundamental life
principles that are certainly applicable to today’s charitable environment. We
will present one principle each newsletter. (principles)
Appreciate
Open Debate
Does
somebody keep forwarding you this newsletter? Get your own copy. It's
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News
Nonprofit
News…
In
Case You Missed It:
1. The University of Louisville Foundation accepted the
resignation of James Ramsey as its president
in a move that appears to reduce the chance of a lawsuit where $38 million in
payments seemingly took place.
2. The
former executive director of the Armed Forces Foundation was indicted on
federal charges stemming from a scheme in which she allegedly stole $600,000
from the non-profit charity, defrauded donors, and lied to the Internal Revenue
Service (IRS) and the public about her salary and benefits. The indictment also
alleges that she took the foundation’s money for her own personal use and to
pay her for-profit business expenses.
3. A
fake GoFundMe account in the name of recently slain Detroit Police
Sgt. Kenneth Steil organizer and his mother were arrested for fraud.
4. Breast Cancer Charities of America/Help Now Fund received
almost $45 million in public donations since it began in 2009. But its Help Now
Fund has only handed out just over $187,403 to women to help pay their bills.
That's less than 1 percent of the $45 million it's collected in donations.
5. A nonprofit has dissolved after an investigation into the
juvenile court system ensnared several of the organization’s staff members in
criminal conspiracy charges. Reconnecting Families filed paperwork to disband
in July, which became effective Sept. 13, according to state records. The
group's website is now gone, but a cached page from May 2015 gives a
description of what it did: "Reconnecting Families partners with the Cobb
County community, court system and academic sector to provide prevention
programs and treatment to offset the impact of drug addiction on the lives of
children, teens and families." It offered not only scholarship and GED
programs, but tangible goods like furniture, clothes and diapers people in
court dealing with juvenile, drug and family issues. The group incorporated in
November 2007. The Atlanta Journal-Constitution previously reported on the group’s troubles.
New court administrator Laura Murphree began the investigation in July after
a "whistleblower outcry by several individuals working in and with the
court system" alerted her to misuse of grant money. From there,
prosecutors audited the books. The audit led to a 27-count grand jury
indictment on federal racketeering charges in December that accused four people
— including former executive director, a court administrator and a former
contractor. The charges included racketeering, theft and other felonies
for being paid $168,000 of grant money for work that wasn't performed.
6. A state ethics panel investigating Mayor Bill de Blasio’s
political nonprofit organization has served a sweeping subpoena on City Hall
seeking communications among the mayor, his aides, the nonprofit, its donors
and consulting firms that worked for it, people with knowledge of the matter
said. The scope of the subpoena suggests
a widening of the investigation by the State Joint Commission on Public Ethics,
which enforces state lobbying laws and has been focused on whether the group,
the Campaign for One New York, illegally lobbied the city in 2015. (nytimes)
7. Americans donated a record $373 billion in 2015, with most of
that coming from individual donors, according to Giving
USA, the Giving Institute and Indiana University Lilly Family School of
Philanthropy said in their publication, “Giving USA 2016: The Annual Report on
Philanthropy for the Year 2015.”
8. Leonardo DiCaprio is aiding the
investigation into a Malaysian embezzlement scam that involved his hit film
about financial market fraud, "The Wolf of Wall Street," according to
his spokesperson. The Hollywood star contacted the US Justice Department in
July just after it filed a lawsuit to seize more than $1 billion in allegedly
ill-gotten assets tied to Malaysian state investment fund 1MDB, including
rights to the film, DiCaprio's spokesperson said.
9.
Every year, the IRS TE/GE Division issues a public
work plan. The 24-page “Tax Exempt and Government Entities FY 2017 Work Plan” contains guidance about employee plans, government
relations, and tax-exempt bonds, but willl focus on just a few elements that
relate specifically to how the IRS proposes to interact with nonprofits and
charities. (nonprofitquarterly)
We flagged these few
examples of charity misdeeds:
1. 12-24
Club (WY) $56,000+
2. Institute
for International Sport (RI) $1 million
3. The
Providence Plan (RI) $600,000
4. Hunger
Free Vermont $116,000
5. Fitzwilliam
Historical Society (NH) $60,000
6. Utility
Workers Union of America Local 532 (MI) $60,000
7. Kids
Against Drugs/Big Bucks Bingo (WV) millions
8. Allied
Community Resources (CTY) $400,000
9. Adventist
Medical Center (CT) $50,000
10. Hanford
Pep Squad (CT) $3500
11. Charity
Angels AMBUCS (OK) thousands
12. Bay
Area Recycling for Charities (MI) $33,112
13. Adventist
Medical Center (CA) $50,000
14. Holy
Trinity Lutheran Church (PA) $175,000
15. Sisters (OR) $250,000
16. United
Auto Workers Local 2317 (IN) $4500
17. Ready
to Learn Providence hundreds of thousands
18.
St. Mary’s Assumption in
Bronson/St. Barbara in Colon (MI)
thousands
19. American
Legion Post 176 (AL)
20. Catholic
Charities of the Archdiocese of Washington more than $142,000
21. U.S. Department of Health and Human Services (HHS), Health
Resources and Services Administration (HRSA), Birmingham Health Care (BHC),
Central Alabama Comprehensive Health in Tuskegee (CACH), and the Birmingham
Financial Federal Credit Union (BFFCU) $16 million
22. International
Health Care Services (IHCS) (MN) millions
23. Huntsville Rehabilitation Foundation (AL) more than ! Million
24. Tender
Care Human Services (NY) over $100,000
25. Anne
E. Moncure Elementary School’s PTO (VA)
26. International
Brotherhood of Electrical Workers chapter 386 (TX) $52,000
27. Children's
Hospital in Detroit (MI) $60,000
28. Triangle
Area Network $360,000
Political/public official chicanery (just a few):
1.
A
former Virginia Tech employee is being investigated for embezzling $127,000
from the university’s foundation and the Virginia Flower Growers Association
over a number of years, according to a search warrant.
2.
She will serve five years in prison for stealing more than $500,000 in excise tax money from the Anson
(MN) Town Office, where she was tax collector for 33 years.
3.
The Butler County (KS) Sheriff says his office is
investigating a possible embezzlement case in Towanda involving the town’s
court clerk.
4.
A former tax collector for the city of Westbrook (ME) pleaded
guilty in federal court to embezzling $118,000 from the city.
5.
The former chief of Pembroke (NC) Rural Fire
Department has been found guilty of embezzling more than $170,000 from the
department, according to the Robeson County Sheriff’s Office, and received an
active prison sentence.
6.
A report, issued by Nebraska State Auditor says
Project Extra Mile's expenses included a $4,600 dinner that was more
entertainment than business as well as too many meals for training events. The
alcohol prevention group made a number of unpermitted and unreasonable purchases.
The report also said the group violated federal regulations that prohibit
lobbying with grant funds
7.
The former head of the
Downtown Pasco (WA) Development Authority embezzled $53,000 more than
investigators initially thought. The results of a state audit released show
Michael A. Goins took $143,242 for his personal use between August 2013 and
last November.
8.
Former Lawrence Mayor
Jeremy Farmer pleaded guilty in federal court in Topeka to one count of
interstate transportation of stolen funds stemming from his time as leader of
the Lawrence food bank Just Food. Farmer had originally pleaded not guilty on
Sept. 8 to the felony but changed his plea to guilty. Farmer admitted to the court that the
theft of thousands of dollars took place while he was executive director of the
nonprofit Just Food, whose mission is to feed the hungry in Douglas County.
He was hired at Just Food
in 2011 and resigned from that position — and from his seat on the Lawrence
City Commission — in August 2015. His resignation came about after it was
revealed he had not paid more than $50,000 in federal and state payroll taxes
on behalf of Just Food.
9.
Kankakee (IL) Valley Park District's former
executive director, Roy Collins, has been indicted on two federal charges
alleging that he started looting the district and its charitable foundation
less than a year after he was hired July 2011. The charges span from early 2012
when prosecutors allege unauthorized credit card purchases started until early
2016 when prosecutors say Collins started creating false documents to conceal
the theft from the Kankakee Valley Park Foundation.
10.
A former superintendent of an Oklahoma school
district has pleaded no contest to a misdemeanor charge of embezzlement.
11.
A former executive at a San
Diego-based Department of Defense contracting firm pleaded guilty to embezzling
more than $825,000 from the company, the U.S. Attorney’s Office said.
12.
A former Altavista (VA)
police chief will serve one year behind bars after being found guilty of
forgery, embezzlement, and obtaining drugs by fraud.
13.
A Washington
City (UT) woman who resigned from her job as Kane County's treasurer amid
an embezzlement investigation earlier this year has been charged in 6th
District Court with four felony counts of misuse of public funds. She is
accused of using her office to transfer property tax and justice court revenues
from the county's bank accounts for the benefit of herself or another person in
a series of unauthorized transactions between March 10, 2014 and
January 11 of this year.
14.
Lisa S. Coico, the president of the City College of New York, the flagship
of the largest urban public university in the country, abruptly resigned, a day
after The New York Times contacted officials with questions about her
administration’s handling of more than $150,000 of her personal expenses.
15.
A former executive
director of the Bonita Springs Assistance Office who was ousted and accused
of pocketing donations (took $47,844.21) meant to
help people in need was
arrested last week. Marjorie Kasell-Johnson faces second-degree grand theft
and second-degree fraud charges, according to the arrest report and court
documents. Both are felonies in Florida.
16.
A nonprofit Michigan
organization linked with Republican groups acknowledged more than $500,000 in
political spending in 2014, less than a month after the Free Press reported
that it had earlier reported no political activity to the Internal Revenue
Service for that year. In June, the
Free Press reported that Citizens for Responsibility and Ethics in Washington (CREW)
had filed complaints with the IRS against several social welfare organizations,
including Michigan Citizens for Fiscal Responsibility, saying they had violated
tax rules. In mid-July, Michigan Citizens for Fiscal Responsibility filed an
amended 2014 return with the IRS, listing $501,987 in political activity,
including giving $155,000 to Hardworking Americans Committee, a Super PAC
spending hundreds of thousands of dollars on Michigan state House and Senate
races; $135,000 to the Republican State Leadership Committee; and $75,000 to
the Michigan Republican Committee.
Political/public official chicanery (just a few):
Readers,
weigh in as to what you think…please continue the tips (they are very helpful) gary.r.snyder@gmail.com
Nonprofit
Imperative gathers
its information principally from media sources...some of which are directly
quoted. Virtually all cited are in some phase of criminal proceedings; some
have not been charged, however there is money missing. These incidents include
only a fraction of the estimated $40 billion of charity crimes. On rare
occasions, there may be duplicates.
We’re
noticed: Cites in various media:
Featured in print,
broadcast, and online media outlets, including: Charity Navigator, Washington Post, National Enquirer, The Patriot-News, Vermont
Public Radio, Miami Herald, New York Times, National Public Radio, Huffington Post, The Sun News, In Touch, Atlanta
Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC
Spotlight on the News, WWJ Radio, msnbc.com, Marie Claire, Ethics World, Tactical Philanthropy, Aspen Philanthropy
Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics,
Accountants News, Newsweek.com, Responsive Philanthropy Magazine, , Portfolio
Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS
REVIEW, National Religious Broadcasters
newsletter, The Charity Governance
Blog, American Chronicle, Palm Beach Post, Detroit
Free Press, Oakland Press, Nonprofit World, Socially Responsible Business
Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide,
Nonprofit Startup Guide, Nonprofit Blog,
National Coalition of Homeless Newsletter, The Michigan Nonprofit
Management Manual, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan
Nonprofit, ncrp.org, PhilanTopic,
Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie
Reporter, Assoc.
of Certified Fraud Examiners Examiner, Worchester
(MA) Telegram and Gazette, Carnegie Corporation of
America, EO Tax Journal, Wikipedia: Non-profit
Organizations; Parent: Wise Austin, Accountants News, Veterans Today,
VPR News, National Enquirer,
- Silence:
The Impending Threat to the Charitable Sector (Xlibris, 2011)
…”This book should be read by
everyone. It will send a shiver down the reader's spine to think that people
with little money to spare have given generously…”
- Nonprofits:
On the Brink (iUniverse,
2006)
- The Michigan Nonprofit Management Manual, Governance Section
Our intent is to
keep you informed.... You may be removed from our
contact list and future mailings by emailing to garysnyder4@gmail.com with the word "remove" in the subject line.
Gary
Snyder is the author of Silence: The Impending Threat to the Charitable
Sector (Xlibris, June, 2011) and Nonprofits: On the Brink
(iUniverse, February, 2006) and articles in numerous publications. The book can
be bought at amazon.com, barnesandnoble.com, Barnes and Noble (store)
© Gary R. Snyder, All Rights Reserved, 2016
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